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depending on the nature of the commodity. If the income elasticity of demand (E I) is negative,
the commodity is inferior. If the income elasticity of demand (EI) is positive, the commodity is
normal (either luxury or necessity). A normal good is usually a luxury if E I > 1, and a necessity if
0<EI<1.
Depending on the level of income, the income elasticity of demand (E I) for a commodity is likely
to vary considerably. Thus, a commodity may be a luxury at low level of income; a necessity at
intermediate level of income; and inferior at high level of income.